And how does it affect merchant acquirers?
The term “mass-marketing fraud” refers generally to any type of fraud scheme that uses one or more mass-communication techniques and technologies – such as the Internet, telephones, the mail, and even mass meetings in person — to present fraudulent solicitations to numbers of prospective victims, to conduct fraudulent transactions with victims, or to transmit the proceeds of the fraud to financial institutions or to others connected with the scheme. Broadly speaking, mass-marketing fraud schemes fall into two general categories: (1) schemes that target larger numbers of victims for comparatively small per-victim losses, ranging from dozens to several hundreds of dollars; and (2) schemes that target numbers of victims for large amounts of per-victim losses, ranging from thousands to millions of dollars, depending on the nature of the scheme.
Based on data from law enforcement and regulatory authorities such as the Internet Crime Complaint Center and the Federal Trade Commission mass-marketing fraud schemes generally fall into three main categories: (1) advance-fee fraud schemes; (2) bank and financial account schemes; and (3) investment opportunities.
From: http://www.justice.gov/criminal/fraud/internet/
It affects merchant acquirers more than any other fraud classification. Although the term “mass marketing fraud” is relatively recent, the activity has been around a long time, and is one of the few fraud types that technology has enhanced.
Unwitting consumers who once had to be targeted via mailings are now enticed by gaudy websites and mass email. Equally unwitting merchant account processors are often mistaken in their belief that they can manage the chargebacks that result from transactions for over priced and under valued products by their merchant.
Merchant underwriters can see examples of mass marketing fraud posted on this blog.